375: The Second Time Around as a Startup Founder
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In today’s episode of The Startup Chat, Steli and Hiten talk about what they call “the second time around”.
“The second time around”, also known as second time syndrome, is basically starting a new business after a previous success or failure at another business. It is common for second-time founders to believe that they will be successful at a second business and most of the time this is no the case.
In this episode, Steli and Hiten talk about what “the second time around” is, how your first attempt affects your second attempt, why being successful the first time does not guarantee future successes, and much more.
Time Stamped Show Notes:
00:00 About today’s topic.
00:45 What is the second time around?
01:00 Should the second time around be easier?
01:15 How your first attempt affects your second attempt.
01:43 A big factor that determines your success in business.
01:53 Why your ability to make good decisions is all that really matters.
03:34 Why it’s important to take the lessons from past experiences.
04:37 Why being successful the first time is not a guarantee for future successes.
05:49 An example of a successful entrepreneur struggling with future ventures.
09:29 A lot of people fail at starting a business and never do it again.
09:23 One tip that can help you be successful in your second attempt.
3 Key Points:
- There’s so much that can be different the second time around.
- People don’t realise that you’re literally building a business from scratch.
- Your own ability to make good decisions is all that really matters.
Steli: Hey, everybody. This is Steli Efti.
Hiten: And this is Hiten Shah and today on The Startup Chat that we’re gonna talk about what we call “The Second Time Around” which is basically when you have a startup and it either fails of succeeds and then you do another one.
Steli: Yeah. The thing that most people think … I’ll start us off with a premise that I want to dissect with you which is the one that’s like the second time around should be easier, shouldn’t it be, Hiten?
Steli: Why? Well, you have all of this experience, you’ve done it before. Well okay, maybe it’s … Is there a different between having failed the first time around or having succeeded the first time around in terms of what the second time around looks like?
Hiten: I think people would lead you to believe it’s that just because they want you to believe it’s either easier or harder or failure helps you or success helps you, but honestly it doesn’t matter. There’s so much that can be different the second time around. There are a bunch of patterns and things you learned, no doubt. But it’s not … I feel like people don’t realize you’re literally building a business from scratch and there are a lot of factors that determine whether your business works or not. One big factor that you learn the hard way oftentimes is that your own ability to make really good decisions is all that really matters, and your ability to do that decisively and fast. The reason I’m picking on that specific one thing out of the millions of things that you could consider is because the first time founder either lost or won, whatever that means, because of their ability to make the right decision at the right time. That could be a fast decision and then undo it later, whatever. Whatever that means. There’s a lot to that. So by the time you’re at the second, whether you won or lost, you’ve made up your mind about a bunch of different things that you might not even realize you’ve made up your mind about. For example, if you tried sales for four years and it didn’t work for you, you might be like, I can’t do sales. Well, when you get into that second business and you’re hit with a problem and sales is going to solve it, what are you going to do? Are you going to make the right decision and just go figure it out even though you failed for four years trying to figure it out? Or are you going to sit there and be like, I can’t do this, and then you’re going to quit. Then now all of a sudden you’re a third time founder. The reason I went there is because that’s just one little nuance of someone’s experience clouding their judgment for the next experience. So I think that it’s really important, to what I do in this specific case, and I’ve done this more than twice unfortunately, is I try to figure out … I have an advantage. I do it sometimes in parallel. So what I do is I try to figure out what happened last time and I be honest with myself. So after my experience with Kiss My Tricks, once I was done with it, I have this one and a half or two page document and it’s got bullets. Not the timeline of what happened, but I just poured in all the lessons that I learned from that experience. A lot of them were mistakes I made, about 75%. 25% were things I think we did really well. That has led to a bunch of things that honestly, I honestly will be conscious of the next time around. I have been conscious of it the next time around. It’s also helped my existing businesses. I think the tip here for me before I let you say anything about this, sorry, is to just reflect on what happened if you want to be honest with yourself. I think this is one where intellectual honesty is what you need. Otherwise, you’re going to just be doomed to the same cycle of mistakes that you made the first time.
Steli: Beautiful. I’ll come out of the bed and say, unfortunately, unsatisfyingly, the answer to will the second time around be easier or harder is always: it depends. Right? It depends on so many factors.
Steli: But I do want to start with something that might be counterintuitive to people. I do think that just because you succeeded the first time around doesn’t mean the second time around is going to be easier. I think people think that because they’re like, well, if somebody succeeded with their first venture, it means that they’ve done a lot of things right, it means that they now have wealth or resources, it means that they have a brand or a name that will attract talent and other investors, it means that they have working relationships with customers, investors, employees that they’re going to be able to utilize again. There’s so many advantages. How could it not be easier the next time around? Well, it’s funny. I have a good amount of friends and people that I know well that had tremendous success the first time around and have failed to be successful a second or third time around, right? It’s not because they’re not smart, it’s not because they don’t work hard, it’s not because they don’t know what they’re doing or that they don’t deserve success. It’s just because it’s not that easy. There’s so many factors at play. With good friends, I always bring up one example that I won’t name here of somebody that I know that is incredibly wealthy. So his first success was not just a little success, it was a massive success. We’re talking billions. We’re talking an insane amount of wealth. That person has been trying to do another venture for I think four years now or five years now and has done two or three different things and none of these things have panned out. I always bring him up as an example because he had such insane success the first time around and I’m like, look, the first venture that he did was incredibly successful, it sold for an insane amount of money. Awesome. He’s obviously smart, works really hard. All the right things. But it’s not a perfect formula. I do think that if you draw a long enough timeline, he’s going to succeed again. But with the ideas, with the ventures, with the timing, the market, for a lot of factors, the few project that he worked on after that just haven’t worked out. They haven’t been as successful. Just because you succeeded the first time around, it’s going to create a certain amount of resources and advantages, but it might also create disadvantages, right? You might have the pressure to immediately succeed. You might have the pressure to go much bigger the second time around ahead of its time. Maybe you’re a little clouded or confused about your skills because the first time around you had perfect timing and you were a little lucky and you confused that luck and timing for skill, right? So the second time around you approached it the exact same way because you don’t have the self awareness that you were highlighting of sitting down and trying to really dissect what did I learn? What did I do well? What didn’t I do well? You just felt like you did everything well because it worked out. So the second time around, you’re lacking the little bit of luck or the right timing and now those same strategies, those same activities, are just not creating the same results. So you might have a bad bias based on your success. The same thing could apply on failure. You could fail and be in a much better position the second time around because you’re learning all the right things and you’re making all the right conclusions and it makes you hungrier and just tougher and more focused. Or you failed the first time around and now you’re less confident. Now you’re more confused. Now you are … It takes away some of your strengths and the beauty of your ignorance and now you’re cynical. Everything that’s proposed by your team, you’re like, “Yeah, but we thought last time this could work but …” Everything that didn’t work the first time around, you’re not approaching anymore with a beginner’s mind. You’re like, all this shit doesn’t work. So you have this cynical mind. Maybe you’re lacking confidence, you’re lacking resources and you’ve got to take that failure and make it bigger the second time around versus making it better. So I think the lessons you learn, the conclusions you make, the skills you’ve acquired can drastically vary. It does matter if it was successful or if you failed, but you can draw the wrong conclusions from failure and from success and you can draw the right conclusions or build up the right skills from failure and from success. I think that’s counterintuitive. I think that founders and entrepreneurs, they want to believe that if they have … I think they kind of concede that if they failed the first time around, maybe the second time around is not going to be easier, but they want to believe, we want to believe if I succeed, if I sell my startup for hundreds of millions, how could it not get easier the second time around? It must be. But I cannot find any evidence for that. Being an entrepreneur for decades now and having so many friends that have both failed and succeeded their first time around and then try it again. I can’t seem to find any conclusive evidence that the second time around is any easier necessarily. It can be, but it doesn’t have to.
Hiten: This is funny. I couldn’t agree more. I think there’s just a lot of storytelling around being a second time founder and what that means. I think that’s what it boils down to, right? Think about how many people start a company and actually never do it again.
Steli: Yeah. That’s also true. Wow. Yeah, yep.
Hiten: There’s a reason for that, right? So yeah, I love what you said about it. It is counterintuitive. The first success doesn’t mean you’ll be successful again.
Steli: I think I’ll bring up one little tip here before we wrap up this episode. This is just because I had this conversation twice this year with friends of mine and so I think maybe somebody out there is having similar thoughts and this might be useful. If you’re a founder, this was your first time around and it has worked out. You’ve seen some success. But you’ve not seen this breakthrough success where in a very short period of time you’re selling this thing for billions. You make a few million in revenue. Maybe you’re in a phase where it’s stalling or it’s really hard to keep it scaling and succeeding. You’re kind of in this messy middle phase and you are thinking, wow, it was so much more fun when it was the beginning and now that I’ve learned all these things and I’ve made all these mistakes, if I did it again, I could do it so much better and I would not have all this messy equity structure with all these investors. I would not have all this … Whatever. Messy things that have accumulated over the two or three years that you’ve been around. You’re like, you know what? Maybe I should just fucking sell this thing or leave this company and just start fresh and take all my lessons learned and everything and just do it much better, much bigger. If you’re in that phase, you really need to step back and ask yourself, do you really believe that the second time around is going to be that much easier and that much better? Or is the risk that once that second startup succeeds up to the point where you’re in right now, you’re going to face the same challenges? It’s just like your company’s now in a phase, in a stage, that you haven’t mastered yet so you’re struggling to get it to the next level. What tells you that the next time around, if you find even a company that will find product market fit that will get to the level of success you are having today … And that’s a big “if”. You might have to fuck around for many years to get to that point … But if you get to that point again, what tells you that you’re going to enjoy that moment better if it’s going to be easier then? Are you just running away from a stage of running a business and a stage of skill that you have to develop that you need either way? The problem is not that this business is shitty. The problem is that at this stage of a business you are dealing with a new set of challenges that you have to master either way. Doing it again will not solve that fundamental issue or challenge.
Hiten: So you’re saying you’re shitty so fix yourself, basically?
Steli: Yeah. The reason why it’s hard is that-
Hiten: Not the business.
Steli: The reason why it’s hard is that you don’t have the skills, right? You don’t know what you’re doing right now.
Steli: It’s not that it’s hard because the business is terrible. That can be the case, but in the situation that pop in my mind, I don’t think that that’s the case. I don’t think the business is shitty. I think those people, quote, unquote, “with love” are shitty in the sense that they don’t have the skills and the abilities and the decisions to make it great. But it’s not the business that is the problem.
Hiten: Yeah. I couldn’t agree more.
Steli: Yeah. Maybe it’s a similar metaphor to the like, your relationship isn’t the problem, so just getting out of that relationship and finding a new one will not solve it. You are the problem. Just figure out yourself and fix the realities of a real relationship in year three, four, five or 10 versus thinking, the next relationship, I’ll make everything better and it’s going to be so much easier forever, right? Alright. Second time around. We hate that we had to break your hearts out there if anybody felt that the second time around is surely going to be easier and more successful. It can be, but it doesn’t have to. That’s the real reality of entrepreneurship. Alright, that’s it from us for this episode.